On the 14th of May 2008, Buy.at held their annual Speakeasy gathering, on the 19th the staff from Buy.at Leads moved into the Advertising.com offices, on the 23rd Altogether Digital relocated from Golden Square to Fitzrovia in London, and the day before yesterday Maz Darvish the CEO of IBG held the mother of all parties.

So what, you may say? These and a raft of other developments and announcements in the ten days in May from the 14th to the 23rd signify the demise of old affiliate marketing and the opening of the doors to a shiny new era.

The first of those ten seminal days saw us bading farewell to Steve Brown, the founder and COO of Buy.at. The network’s fifth yearly gathering was an emotional swansong to a man who grew Buy.at from a tiny start-up in Newcastle in 2002 to an affiliate network with 200 e-commerce clients ranging from Virgin Media to Marks & Spencer to Sky and to such heights that it was sold on the 5th of February 2008 to AOL’s Advertising.com for a reputed £75/$150 Million.

Those ten hallowed days ended with the great and the good attending the most sensational gathering I have experienced in my 11 year career in online marketing and arguably the most memorable alongside the historic Kensington Roof Gardens affiliate marketing event half a decade previously. Friday’s party at Soho’s legendary Kingly Club was held to commemorate Maz leaving IBG (owners of AffiliateFuture), the company he founded in 1996 and has been the CEO of for the last 12 years. Having sold it on 14 December 2007 to TMN, it was time for him to move on.

There was hardly a day after the Buy.at gathering when I did not hear of one internet company after another relocating to be part of bigger mix, whether it was Buy.at Leads to be with Advertising.com, Altogether Digital to be based under the same roof as the rest of The Engine Group; even while interviewing a representative from Sedo UK on the 20th for this blog I discovered they were moving to the AdLINK UK offices to be with affilinet, Composite Digital Media and AdLINK’s other internet media arms.

Affiliate marketing and the whole of online marketing are invariably intertwined and one could classify their development in five approximate Ages. The first was those now misty days from the mid-1990s to 1999.

This era, burdened with snail-paced internet connections, saw the first spam email and the first banner advertisement. American retailers like Amazon.com and CDNow launched their pioneering affiliate programs. As we moved towards the millennium, other businesses began to see the benefits of (a) having a website and (b) promoting it via affiliate marketing; it was a drawn out process, but bit by bit companies began to tip their toes in the water.

The Second Age was the free spending dot.com boom years from approximately 1999 to 2001. The bubble burst with the technology-heavy NASDAQ composite going into freefall. A not-uncommon case was InfoSpace who were worth $1,305 per share in March 2000, yet by April 2001 their price had crashed to $22 a share. Many an internet business closed down after their venture capital ran dry and the skills shortage we witness to this day in online marketing partly results from huge numbers of people quiting the industry with their tails between their legs after the dot.com crash.

The beginning of the Third Age was a tough time for e-entrepreneurs. In just two years the CPM rates our websites received for showing banners plummetted from around $8 to less than $2. The leanness of the 2001-2004 era was epitomised by domain name prices remaining flat or going down. But this was also the time when affiliate marketing stepped up a gear, and many of today’s most successful affiliates and affiliate networks started out at this time. It was a golden window of opportunity for some PPC affiliates as the unregulated environment meant they could bid on brand names to their hearts’ content without receiving a rap on their knuckles and many made millions by doing so.

In the Fourth Age, which I would classify as starting around 2005, digital marketing and affiliate marketing experienced a boom. With the long-awaited move to broadband finally in their homes, the availability of truly remarkable and useful websites, and an ostensibly flourishing economy, people were not able to get enough of the internet and its Aladdin’s Cave of offerings, spending increasing amounts of time and money online.

Affiliate marketing has contributed to and ridden the wave, professionalised and become an almost-‘must have’ in the online marketing mix; while charting the progress of the channel over the last decade with Maz on Friday, he joked to me, “affiliate marketing has even become semi-respectable”. The likes of Doubleclick buying Perfomics, AOL Buy.at, and TMN Affiliate Future, demonstrate that corporations are aware they won’t be able to be a force in online marketing, indeed in marketing as a whole, unless they have a foothold in affiliate marketing.

And from that we return to the landmark events of and between Steve Brown and Maz Darvish’s retirement dos. The dot.com bubble did not burst overnight and it took almost two and a half years for the NASDAQ to plummet from it’s 10 March 2000 peak of 5123.52 to it’s bear market bottom of 1,108.49 on 10 October 2002, and ten days do not see the move from the Fourth to the Fifth Age, but the events from 14th to the 23rd of May may be seen as symbolic of not only the move to a new epoch but the end of many of the characteristics and characters that have been present in online marketing since its conception in the mid-1990s. Indeed, were one to cogitate a new classification, they symbolise the end of the first ‘Wild West’ phase and the beginning of a second, steadier epoch.

We are at the dawn of a new era. Many of the remarkable pioneers have gone, are semi-retired or planning their exits. Some of those entrepreneurs who launched cutting edge online businesses in the 1990s and were among my role-models, Kevin Anderson, Corey Rudl and Jim Wilson, have died. Others from the old guard now seem to have lost their passion and focus their energies on arranging their children’s birthday parties, travelling the world, or slipping chips into fruit machines than tapping on keyboards. Many have upped stumps entirely as they earned enough money to live off for the rest of their lives and chosen to retire or move onto new challenges.

One of my abiding memories in this industry is meeting the CEO of an acclaimed comparison shopping service, Acses, in 1999 if my memory serves me right. I was one of the top publishers on their affiliate program and we arranged a rendez-vous in the magnificent Alte Stadt of Heidelberg in Germany. He asked me to meet him at a bus stop. I stood there expecting the CEO of a company valued at millions of Deutsche Mark to turn up in a Mercedes or a BMW. It was a surprise to see a rather shabbily dressed bloke stepping off a bus at the arranged time and greet me. We spent a delightful afternoon in a student pub, talking excitedly about how the world was gradually discovering comparison shopping.

CEOs like Christopher Münchoff will be few and far between in the new internet era. I lost touch with him many a year back and, as for his business it’s evolution typifies the path the internet river has flown: Acses was renamed Dealpilot.com and Dealpilot.com was bought for a handsome sum by Bertelsmann at boom time in October 1999; they rebranded it to EvenBetter.com, and that was sold to DealTime for $100 million, taking on the owner’s name; that is now part of Shopping.com which was bought by eBay for $620 million in 2006.

Maz was another Münchoff who you could enjoy fascinating conversations with in kebab shops and his moving on truly signifies the end of an era. For the better? No. Necessary to take affiliate and online marketing to the next level? Sadly, yes.

What’s your opinion? What will be the impact of affiliate networks becoming part of larger media and marketing groups? Will it become easier or more difficult for publishers to make money online?

2 Responses

A superb potted history of affiliate marketing through the years. You obviously have a tank of knowledge and I hope you will be able to write a more detailed account of how a. m. has developed over the last decade.